1. The nominal risk free rate (R_RF) equals 0.35%. The market risk premium is equal to 6.0%. The Beta of Harrahs Inc is 1.23. Use the CAPM to calculate the required rate of return for Hershey stock (Rs)?

2. If you are a risk-averse investor and you decide to hold a single stock, which stock would you prefer? Use the Coefficient of Variation (CV) to determine your answer. Explain your final choice.

A stock with an expected return of 18% and a standard deviation equal to 10%.

A stock with an expected return of 6% and a standard deviation equal to 4%.

A stock with an expected return of 15% and a standard deviation equal to 14%

3. Assume you have a portfolio with the stocks and their information:

Stock	Total $ invested	Beta	Expected Return
DuPont	$25,000	0.99	10.12%
McDonalds Corp	$50,000	0.72	8.16%
Ford	$60,000	1.24	12.2%

A. Calculate Beta of the Portfolio.

B. Calculate the Expected return for the portfolio using the CAPM and the beta value for the portfolio. Assume the market risk premium (Rm Rrf) equals 6% and the Risk free rate (Rrf) equals the rate on a 2 year treasury 0.25%.